UNIVERSITY OF FINANCE AND ADMINISTRATION

Faculty of Economic Studies

Field of Study: Business Management and Corporate Finance
Course: Strategic Management

Case Study
Sberbank CZ and its strategy in retail banking

Jan Budaev
Prague
winter semester 2015

Table of Contents

Introduction 3
Strategic Management. 4
1.

Strategy Formulation 5

2.

1.1
Vision and mission 5
1.2
Internal and External Environment 6
1.2.1 SWOT Analysis 7
1.2.2 PEST Analysis 8
1.2.3 Long-Term Objectives 9
Strategy Implementation 10

3.

2.1.
Annual Objectives 10
2.2
Build Corporate Culture 10
Strategy Evaluation 12

3.1
Review 12
3.2
Measuring Performance 12
3.3
Summarization of Results 14
3.4
Taking Corrective Actions 15
Conclusion 15
4.
Bibliography. 16

Introduction

Sberbank CZ, a.s. is a relatively new, medium-sized bank in the Czech market.
Firstly, in 2011, Sberbank of Russia bought all the assets of Austrian Volksbank in
the Czech Republic, Slovak Republic, Croatia, Ukraine, Slovenia, Bosnia and
Herzegovina, Serbia and Hungary. According to the company's results in 2011, the
purchase price was amounted to around 600 million euros .In 2013, Volksbank
changed its name to Sberbank CZ.
Sberbank CZ represents itself as a modern bank with a comprehensive portfolio
of products and services designed for individuals, small and medium enterprises as
well as large corporations. We serve almost 100,000 customers throughout the
Czech Republic we build on strong track records and deliver solid financial and
economic results. We are a subsidiary of Sberbank Europe AG a member of the
Sberbank financial group. Sberbank (group) is active in 22 countries where it serves
over 110 million customers. [1]
The very interesting point is that, Sberbank CZ is a bank open to new ideas. The
green corporate colour symbolises a fresh offer of attractive products and services
designed for demanding customers as well as our orientation on go green
corporate social responsibility activities.[2]

Awards and Accolades

Best Bank of 2015 (third most client-oriented bank of 2015)

Finparda Financial Product of 2014 (Sberbank CZ Savings Account)
Zlat Mec 2014 Best Financial Institution
Best Bank of 2014 (second most client-oriented bank of 2014)
Best Bank of 2013 (most client-oriented bank of 2013)
Fincentrum - Bank of the Year (third most dynamic bank of 2013

The main point of the study case will be primary focused on analyzing the period
during the rebranding from Volskbank to Sberbank CZ.
The main goal of the project is to outline and review the strategic goals in retail
banking of Sberbank CZ and evaluation of the strategic position of the bank in
functional, business and corporate levels.

Strategic Management
Strategic Management as such is basically managing for long-term planning and
directions of the organization. Strategic management in the organization mainly
ensures that actions do not happen randomly but according to a pre-planned,
long-term plans. Strategic management is used both for transmitting requests by
the owners to management organizations as well as the organization's
management to organize, unify and regulate the behavior of all people in all parts
of the organization.

Strategic management is the key managerial activity, where all the management
functions are meeting. It is one of the key pillars of governance and creates a
framework of overall management of each organization. It formulates rules of
functioning, priorities and direction for the organization in the long term, it wants
to achieve. The entire process of strategic management is carried out in three basic,
continually repeating stages: Formulation, Implementation and Evaluation.

1. Strategy Formulation

Strategy formulation includes developing a vision,mission and values, identifying

an organizations external opportunities and threats, determining internal
strengths and weaknesses, establishing long-term objectives, generating
alternative strategies, and choosing particular strategies to pursue.[3]
It is the first step in forming a strategy, it determines what resources the business
currently has, that can help to reach the defined goals and objectives.
If an organization wants to be successful, it should emphasize the selection of an
appropriate strategy to reduce strategic gaps, that is appealed in order to operate
and offer its products and services.Selecting the right strategy is mainly determined
by the situation around the company and internal factors of the company. It is
important to determine the key factors and then the formation of appropriate
strategies.
In this case, Sberbank CZ had a lot of to do connected especially with formulating
the proper strategies for retail clientele and corporate sector because previously
Volksbank was mainly focused on affluent clients or on small or medium
enterprises. One of the most important steps was to adapt the products and
infrastructure of the bank especially for mass-market and Russian clients.

1.1. Vision and Mission

The vision of the organization basically describes the desired future position of the
organization. It provides guidance and inspiration as to what an organization is
focused on achieving in the future.
As the main elements of the brand representation Sberbank mainly symbolized the
predominant green color, logo and writing - which represent fidelity traditions,
direction forward toward change - which represents the evolution, use of natural
motifs - which means closeness to nature and sunbeam - which is a positive
energy.

Sberbanks vision was to become a modern successful company and a major player
in the banking market in Central and Eastern Europe. Within five years we want to
be the fifth largest bank and raise 67 billion CZK of managed assets to 200 billion.
Another aim was to complete the branch network and increase the amount from 22
to 45 branches by the end of 2015. stated CEO Vladimir olc for Hospodsk
Noviny. [4]
After the complete rebranding of Volksbank to Sberbank in accordance with the
business strategy, one of the most important mission was focusing the retail,
especially increase the growth in customer deposits and a rise in customer loans.
Regarding the retail missions, Ji Anto, the member of the management board
stated: One of the most important thing is to focus and improve on-line methods
with the communication with the bank. The future faces a lot from the Internet on
your computer to your mobile phone. Operating bank account using the classic
Internet banking is very extended to include. [5]
The so-called digitization is a very modern trend in today's retail banking. Another
important aim was to offer a new wide range of bank products and services for the
customers.

1.2. Internal and External Environment

The internal environment includes factors within the organization that affect the
success and approach of the organizations operations. The external environment
consists of a variety of factors, which are affecting from the outside of the
organization. Managing the strengths of the internal operations and recognizing
potential opportunities and threats outside of the operations are the keys of
success.
Sberbank's main competitors in retail banking are Raiffeisenbank and GE Money
Bank and partly FIO bank. Sberbank wants to acquire mainly clients from Komern
Banka, SOB and esk Spoitelna. AirBank, ZUNO and Equa Bank are not perceived
as competitors.

To analyze Sberbanks internal and external environment, SWOT and PEST analysis
will be utilized in order to estimate the organizations position in the market.

1.2.1 SWOT Analysis

Strenghts
background of the big Russian state-owned bank
a network of branches in regional centers {Prague, Brno, Ostrava)
a comprehensive portfolio of products
an innovative approach in the product area
the highest interest rates in the Czech market
financial stability and healthy
Weaknesses
image of Russian bank, especially in the current political period
the bank needs to catch up the period in terms of innovation and technological
background, which was part of the Volksbank, which was previously rather
conservative in these areas
external supplier of the payment cards (SOB, a.s.)
outdated support of the Smart Banking
Opportunities
export financing (global-corporate level)
rising number of new customers
opportunities in Russian-speaking clients
Threats
sanction against Russian decreased business (export financing)
regulations from Sberbank Europe AG
high competitiveness in the market
7

1.2.3 PEST Analysis

It is a strategic planning tool used for controlling and assessment of the macroenvironment factors, which affect the organization. These factor must be analyzed,
recognized by their meaning and direction and use it to organizations advantage
to adapt its behavior to the current development and innovation.
Political
Analysis of the political factors deals with the stability of the political scene, which
has a direct impact on the stability of the legislative framework, such as restrictions
on business.
Besides the stability is of course important, the content of both: the present and
the future. All relevant laws and proposals are important for the region where the
organization operates, as well as the behavior of regulations.
Due to the political situation occurred in 2014, the EU determines sanctions against
Russia, and even though Sberbank has not been included in the sanctions list, many
clients not just from Russia and Ukraine have scaled down their investment and
deposit activity especially in corporate level. Due to this uncertain situation, the
Bank also lost several important inter-bank cooperation.

Economic
The economic environment is particularly important for estimating the economical
growth, exchange rate, cost of labor and prices of products and services.
Despite all the economic and political uncertainties associated with sanctions in
2014, Sberbank officially stated that Sberbank CZ, Inc. continues in a normal
activity for the operation holds a sufficient amount of liquidity and capital.
Sberbank CZ, Inc. continues to focus on providing services and support to its
clients and that in line with its long-term development strategy it represents a
significant and reliable partner in the European countries whose markets it
operates.[6]
Social
This area is important especially in the retail banking - sales of bank products to
the final consumers. It deals with at the demographic characteristics, lifestyle
8

trends, ethnic and religious issues, but also the area of media and their influence
perceptions of advertising, trade fairs and major conferences. According to the CEO
Vladimir olc, Sberbank retail strategy focuses on a wide range of clients.
In the terms of social responsibility, the long-term strategy announced in 2012
were launched two major projects - employee volunteerism and charitable fund of
Sberbank CZ.
Technological
Technological environment in the retail banking primary focused on innovations
and offering new banking products and its quality system support and
infrastructure.
In 2013, there were launched Sberbank Online Bank. Smart Banking service could
also benefit the owners of devices with Android version 2.3 and higher and iOS
version 5 and higher. Smart Banking is designed to control current and savings
accounts of Sberbank. These services will also enable clients to enter the standard
payment, payment via QR code or to find the nearest branches and ATMs of
Sberbank.
Sberbank still has externally supplied external card from SOB, a.s. However, the
bank is working intensively to transition to its own production, technological
solutions should be done by the end of 2016. The new cards will additionally
include contactless functionality.

1.3. Long-term objectives

Every financial institution sets the long-term objects during its establishment. The
goal means a fair idea of where the organization wanted to get or what it wanted to
achieve in a certain timeframe.
Sberbanks main long-term objectives were to increase market shares in the Czech
market, encourage Russian investments in the Czech Republic, increase the amount
of the new customers, alignment of internal processes, offering new banking
products, digitalization and expanding branch network.
The marketing objectives were primary to increase awareness of the new brand,
products and account. Targeting men and women aged 21-55 years with secondary
and university education, employed and living an active lifestyle.
9

2.

Strategy Implementation

The first step in forming a strategy, it determines what resources the organization
currently has that can help reach the defined goals and objects.

2.1. Annual Objectives

During the first half of the year was redesigned and rebranded all points of sale. It
wasn't just a visual change, but about a fundamental rethinking of products,
processes and quality service.The second flagship branch was opened at the end of
the year in Karlovy Vary. Awareness of the name change has been building the
means of advertising campaigns.
According to the first annual report of 2013, comprehension and comprehensive
understanding of the needs of Sberbank clients is number one priority. Sberbank
introduced new products and services that meet the expectations of both
individuals and small and medium-sized enterprises and large business
corporations. Offering innovative products and services remains one of Sberbank
top priorities.
The offer for retail clients was united under bank lines of "fair" products and
services, which are based on transparency and mutual benefit for both the client
and the bank. The basic building block became fair account available in three
variants according to the preferences of the client, including basic versions with no
monthly fee. Product line has added an attractive offer including a fair credit
loan, fair consolidation and fair credit card.
In the area of deposit products attracted even within competing offer from
Sberbank savings account, which held one of the highest interest rates in the
market especially in the second half of the year. Client interest in residential
mortgage financing from Sberbank led to strengthen the bank's position in the
mortgage market.[7]

2.2

Build Corporate Culture

Corporate culture consists of habits, shared opinions, recognized values and rules
of conduct for workers within the company and how they are presented to the
external environment.Corporate culture determines how the bank and its
employees to behave and output to their clients and to each other,
10

Sberbank created a new cultural values and social norms and standards of conduct,
principles and rules applicable in the organization, which will support cultural
aspects. German Gref, CEO of Sberbank Russia stated new values and way thinking
of the organization:
ALL FOR THE CUSTOMER - We are here for our clients and strive to do our best for
them. This approach seeks to comply not only with respect to external clients as
well as internal.
WE ARE A TEAM - Though as a bank are growing and we have a variety of
departments with different priorities, we're still a team that combine the same goals
and values. So together let's build our winning team.
I AM A LEADER - A leader is not just a manager or director, the leader can be every
employee, regardless of position or level of function. Being a leader means to be
ambitious, have high goals and ambitions are fulfilled, want to be good at what I do
have ideas, promote them, demolish them and other arts follow it through to the
end. In Sberbank you in that only support.

11

Strategy Evaluation

Strategy evaluation and control actions include performance measurements. It is

the review of internal and external issues and making corrective actions when
necessary. Evaluation begins with defining the parameters to be measured.
Monitoring internal and external issues will also enable to react to any substantial
change in the organizational environment.
3.1

Review

The retail banking sector has very significant changes during the first time, which
are mainly related to the appearance and operation of all branches following the
rebranding of Volksbank to Sberbank.
The flagship branch of the Sberbank in Na Pkop 24 was opened in November
2013 and one new branch was launched in Karlovy Vary. Sberbank network
development plan for 2014 and 2015 expected a doubling of the current number of
branches.
The branch network rebranding project following the change in the banks name
focused especially on the creation of the points of sale with a maximum emphasis
on customer comfort. New technologies were also in- stalled at Sberbank branches,
including an iPad service zone, touch screens and the interactive evaluation of
bankers directly at the counters. In addition, elements of sensitive marketing were
also used. [8]
The most important changes in retail included the introduction of new banking
products and services.
3.2 Measuring performance
Sberbank CZ annual report stated that: Despite strong competition in the market,
the year 2014 was a year of record breaking results for the Sberbank CZ retail
division. In 2014, Sberbank CZ acquired a significant number of new retail clients,
achieved high sales volumes in the key retail product areas (consumer loans,
consolidation loans, savings accounts and mortgage loans), expanded the branch
network with ve new and three re-located and/or redesigned branches and
witnessed the amazing launch of the brand new on-line sales channel eShop
with a current share of almost 10% in the sale of consumer loans.
12

In 2014, Sberbank CZ expanded its branch network with new branches in

Pardubice, Teplice, Frdek-Mstek, Praha I. P. Pavlova and Prague Centrum ern
Most.Two branches were relocated to better premises in Hradec Krlov and Prague
Strossmayerovo nmst and one completely redesigned branch in Olomouc.
Operating a network of 27 branches as at the end of 2014, Sberbank CZ is now
present in every region of the Czech Republic with reinforced presence in Prague.
The branch network expansion will continue also in 2015 with additional three new
branches planned to be opened in 2015.
In April 2014, Sberbank CZ launched a new sales channel an on-line eShop with
the help of which Sberbank CZ achieved fantastic results. With a share of
approximately 10% in the sale of consumer loans and savings accounts, this
channel enables the clients to enjoy the Sberbank CZ services and products
anywhere in the Czech Republic without the need to visit any Sberbank CZ branch.
In 2014, Sberbank CZ continued to adjust its products designed for individuals and
micro segment clients. In making its products more attractive to the customers,
Sberbank CZ as one of the first banks in the Czech market introduced a bonus
for due repayment of consumer loans and continuously adjusted its mortgage loan
interest rates in reaction to the situation in the market in order to maintain the
competitive edge of this product.
The savings account offered by Sberbank CZ became the most attractive deposit
product in the market followed by FAIR Savings with one of the top savings rates
offered in the market and GUARANTEE Savings Account introduced in April 2014
with a unique savings rate guaranteed until the end of 2015. The savings scheme
offered by Sberbank CZ was named the Best Financial Product of 2014 in the
category of savings products and simultaneously saw a major increase in the
number of opened savings accounts (by 150% as compared to the year 2013).
In 2014, Sberbank CZ introduced also three new additional bank insurance
products offered in co-operation with BNP Paribas Cardif insurance company
payment protection insurance (consumer loans and mortgage loans), travel
insurance and insurance of payment cards and personal possession.

13

3.2

Summarization of Results

In terms of business results in 2013 occurred in the retail segment to a significant

double-digit growth in total deposits by 12% and above of the total volume of loans
by 24%. A great impact on the rise in the volume of mortgages by 22% and
consumer loans by 8%. The total number of clients in the retail segment increased
in 2013 by 10%.
In terms of business results in 2014, the Sberbank CZ retail division reported a
growth of 7.5% in the aggregate volume of deposits (from CZK 21.2 billion in 2013
to CZK 22.8 billion in 2014) and over 8% in the aggregate volume of loans (from
CZK 18.3 billion to CZK 19.8 billion) with a double digit growth of 19% in the
aggregate volume of consumer loans (from CZK 12.5 billion to CZK 14.8 billion);
and a growth of 28.5% in the total number of retail clients (76 137) the highest
growth within Sberbank Europe.

14

3.3. Taking Corrective Actions

In my own opinion, Sberbank should be more actively supporting and developing
internet banking, smart banking, as well as expanding the capacity of selling
products and services through online channels.
The Bank also should not fall behind in the field of payment cards and move on its
own production of payment cards as soon as possible. It will considerably shorten
the duration for the production, delivery and support activities of the cards.These
cards should be provided with wireless technology as well.

Conclusion
To main purpose of the study about the retail of Sberbank was to outline and
analyze strategic formulation, implementation and evaluation of the internally
gained data from the organization.
According to the results and awards obtained in retail, it can be concluded that the
bank has undergone considerable development and has achieved or, in some cases
exceeded its main objectives. Financial aspects of the corporate seems to be very
stable and healthy.
Regarding the growth of the branch network, number of the new clients and retail
stores, it is clear that the period after the rebranding of Volskbank was very
successful and the bank faces forward. Nevertheless, they are recorded some
aspects that need to be supported and improved.
According to the strategic plans for the next periods, the bank will place a pressure
on eliminating those weaknesses.

15

Bibliography

[1]

Sberbank CZ, Introdution [online] Available at:

https://www.sberbankcz.cz/en/about-the-bank/about-sberbank-cz

[2]

Sberbank CZ, Introdution [online] Available at:

https://www.sberbankcz.cz/en/about-the-bank/about-sberbank-cz

[3]

Maggu V., Study materials, strategic management lectures, 31.10.2014

Available only for students at: www.is.vsfs.cz

[4]

Olga Skalkov, Hospodsk Noviny, 12.09.2013

[5]

Tom Houdek, www.bankovnictvi.iHNed.cz, 09.2013

Available internally in banking sources

[6]

Sberbank CZ, Official Statement [online] Available at:

https://www.sberbankcz.cz/novinky/oficialni-prohlaseni-Sberbank-CZ

[7]

Sberbank CZ, Official Statement [online] Available at:

https://www.sberbankcz.cz/novinky/oficialni-prohlaseni-Sberbank-CZ

{8}

Sberbank CZ, Official Statement [online] Available at:

https://www.sberbankcz.cz/novinky/oficialni-prohlaseni-Sberbank-CZ

16